As traditional offshore havens like Switzerland tighten regulations and financial scrutiny, African elites and companies are increasingly turning to Asian financial hubs — notably Dubai, Singapore and Hong Kong — according to a recent University of Oxford study .
Capital flight exacts a heavy toll on African economies, with the continent haemorrhaging over $88 billion each year according to U.N. figures cited in the study. The three Asian financial centers are increasingly attractive destinations for this money and have become among “the fastest growing and most significant transnational connections for Africa.”
The study, a working paper that has not been peer-reviewed, was authored by Ricardo Soares de Oliveira, professor of political science at Sciences Po and a senior research fellow at Oxford.
The research “was motivated by the fact that African offshore links with Asian financial centres have massively increased over the past decade or so, but that there are few studies addressing this dynamic,” de Oliveira told the International Consortium of Investigative Journalists.
He said that: “While some financial centres have become more tightly regulated, and less accessible to African financial flows, other centers have come up to replace them. There is certainly no lack of supply to meet the demand, and no reason to believe that hiding money abroad has become more difficult.”
Among Asian financial hubs, Dubai stands out for its deep financial ties to Africa, not only through the presence of large emirati firms on the continent but also through the emirate’s role in illicit financial flows and commodity-based money laundering.
Dubai is now the fourth largest source of foreign direct investment to the continent.
The city’s proximity to Africa and extensive flight connections, combined with its developed infrastructure and glitzy image, have helped make it a destination of choice for wealthy Africans, according to the Oxford report. Beyond that, the emirate has actively lured high-net-worth individuals with tax incentives, light regulation, and financial secrecy.
The report details Dubai’s emergence as a hotspot for money laundering and illicit financial flows — a development highlighted by the Panama Papers and other investigations by the International Consortium of Investigative Journalists. As ICIJ’s Swazi Secrets investigation revealed, much of that money is laundered through gold.
According to the Oxford study, Dubai has become “the lynchpin of gold smuggling from across Africa, accounting for some 95% of the illegal trade from East and Central Africa in 2020.”
Once in Dubai, illicit gold is smelted with other gold and from there shipped to international markets.
There is certainly no lack of supply to meet the demand, and no reason to believe that hiding money abroad has become more difficult.
— Ricardo Soares de Oliveira, report author and professor at Sciences Po
Dubai is also a notorious haven for corrupt elites and their assets, and for its reluctance to cooperate with foreign policing bodies. “If based there, the rich and powerful are almost certain to escape legal prosecution at home,” the report noted.
Among the prominent African politicians and businesspeople hiding in Dubai is Isabel Dos Santos, the daughter of Angola’s former autocrat, who continues to evade Angolan authorities. The Gupta brothers, wanted in South Africa for grand-scale corruption, also remain safe there despite South Africa’s attempts to have them extradited.
Another example of Dubai’s growing importance to African elites is the boom in real estate investments from Africa, which surged more than fourfold between 2013 and 2018.
In a sign of growing international pressure, the Financial Action Task Force — a global anti-money laundering body — placed Dubai on its “grey” list of countries under increased monitoring to address anti-money laundering deficiencies.
It was removed from the list in 2024 in a move that was seen by some as driven by geopolitical considerations. Politico reported that “a group of European countries that originally supported sanctioning the United Arab Emirates began urging the body to remove the country from the gray list last year.” This coincided with European attempts to win energy support from the Gulf after Russia’s 2022 invasion of Ukraine.
The need for ‘truly global’ reforms
The report notes that, compared to Dubai, Singapore and Hong Kong are less popular with African elites as places to live, but these two financial centers are of growing importance to Africa’s offshore economy and offer similar laissez-faire regulation, asset protection, secrecy and tax exemptions.
With the massive expansion of Chinese interests in Africa, Hong Kong has positioned itself as a stepping stone to the African market. The study notes that Hong Kong offers “privileged access to the Chinese mainland,” ease of doing business, low regulation, and a credible common law legal system.
Many Chinese firms in Africa, notably in the corruption-prone extractive industries, rely on opaque corporate arrangements and transactions in Hong Kong. The territory’s secretive business environment enables tax avoidance and opportunities for money laundering that harm African economies, according to the report. For the same reasons, it is a favored destination for African elites to hide ill-gotten assets and as a conduit for illicit transactions.
Leaks like the Panama Papers have shed light on Hong Kong’s central role in the offshore world. The busiest offices of Mossack Fonseca, the firm at the heart of the Panama Papers, were in Hong Kong and China.
However, the Oxford report points to a recent shift away from Hong Kong due to Western corporate flight amid China’s slowing growth, Beijing’s political repression and clampdowns on foreign businesses. And according to the report, the departure of Western firms works in favor of other offshore centres, like Singapore.
ICIJ’s Offshore Leaks showed the importance of Singapore-based firms like Portcullis TrustNet and Asiaciti Trust in setting up shell companies and structuring complex transactions to conceal assets and mask ownership.
Prominent African elites have relied on the services of such firms to help them hide their assets and interests behind Singapore’s secrecy laws. Among those elites, as reports from the ICIJ-led Pandora Papers investigation showed, were Zimbabwean mining magnate Billy Rautenbach, who was sanctioned at the time, and Abubakar Atiku Bagudu, a prominent Nigerian politician accused of having been complicit in the rampant looting of his country.
The rise of the three Asian offshore hubs followed tightened financial regulation in Western economies in response to the 2008 financial crisis. While Africa continues to lose billions to illicit financial flows, African governments have been ambivalent about addressing the problem. “There are many reasons for this hesitation,” de Oliveira argues, “but vested interests by those who benefit personally from offshore strategies is one of them.”
And despite the shift towards Asia, Western jurisdictions and firms remain central players in the offshore world. The offshore industry is completely interwoven and both Western and Asian offshore centers, the report notes, “function in strikingly similar manners,” while Western blue-chip companies remain key players in Asian offshore markets.
Though the rise of the trio of Asian financial hubs is widely seen as “a new post-West business arrangement” unconstrained by “good governance moralizing” and “practical barriers,” the study suggests that these trends do not signal an entirely separate and competing offshore system. Instead, this represents the expansion and diversification of an existing global offshore network.
Reforms to curb illicit financial flows, says de Oliveira, therefore “need to be truly global.”
“If they are not, tightening up in some jurisdictions merely shifts business away to other more permissive jurisdictions. If their home countries become more demanding, Western service providers are happy to follow the business and expand their footprint in the new locations.”